Attorney Fees in Class Action Settlements: An Empirical Study

Abstract

3115 U.S.C. § 78u-4(a) (3) (B) (v) (2000). '15 U.S.C. § 78u4(a) (3) (B) (iii) (I) (bb) (2000).

The Effect of Judicial Expedience on Attorney Fees in Class Actions

“…Hensler et al (2000) find that attorney fees in the 10 cases they exami n ed ranged from 5 percent of the settlement to 50 percent. However, since the actual amount collected by plaintiffs is often smaller than the settlement fund, attorney fees as a percentage of damages actually collected were closer to 50 percent on average, much higher than the one-third fee mark that is often cited or the one-quarter fee rate found in Eisenberg and Miller (2004).…”

“…This technique generated 449 cases, and fee information was avaiLableinA17 cases (Eisenberg and Miller 2004).7 In general, we follow Eisenberg and Miller's (2004) specification for fees with the addition of the congestion measures described below. We do, however, drop all state cases from the data set since we have court congestion data only for federal courts.8.…”

“…The Eisenberg and Miller (2004) data were constructed from the Westlaw AllCases database, the Lexis Mega database, and the Commerce Clearing House Federal Securities and Trade Regulation Reporters. This technique generated 449 cases, and fee information was avaiLableinA17 cases (Eisenberg and Miller 2004).7 In general, we follow Eisenberg and Miller's (2004) specification for fees with the addition of the congestion measures described below.…”

“…We do not present results using the Eisenberg and Miller (2004) risk variables because of the subjective nature of the risk determinations used in their data set. However, this does not affect our results.…”

“…As a practical data matter, in cases where the defendant pays the fee, the , fee is not included in the award amount of the plaintiff class. Eisenberg and Miller (2004) posit that the age of the case is a proxy for complexity.10 Another possibility is that the age of the case proxi e s for the time value of money if we assume that because most of the plaintiff's attorney's investment in the case is made early on he or she would need to be compensated for having to wait until settlement to recoup his or her investment. We include the variable following the Eisenberg and Miller (2004) specification.…”